Definition: An auction market is the market where interested buyers and sellers enter ambitious bids and offers, respectively, at the same time. The price at which the security trade reflects the highest price the buyer is interested to pay and the lowest price at which the seller is interested to sell.
The trade is executed at the price where the bid and the offer price match. It is different from an over-the-counter (OTC) market where the trades are negotiated. Auction is also used in initial public offerings (IPOs). The type of auction used in IPOs is called Dutch auction. Auction is used in different stock exchanges around the world.
Description: In simple terms, an auction market is the place where the highest price is defined by buyers and the lowest price is defined by sellers to place an order for a particular entity or service. The transaction is executed only if both the buyer and seller agree on the defined price or amount.
A standard example of an auction market is the New York Stock Exchange (NYSE). Auction markets vary from one counter to another and trades are also negotiable at that place. The New York Stock Exchange (NYSE) is one of the world’s leading auction markets.
For example, suppose 10 buyers want to buy a share of a company called ABC and make bids at Rs 10, Rs 20, Rs 30, Rs 40 till Rs 100.
On the other hand, there are 10 sellers who seek to sell the same shares at Rs 15, Rs 25, Rs 60, and Rs 120. Here, the transaction between the buyer and seller that made bids/offers for ABC company shares will be done at Rs 60. All other orders will not be made immediately and the minimum price of shares will then be Rs 60.

Definition of 'Asset Allocation'

Definition: Asset allocation is an investment strategy by which an investor or a portfolio manager attempts to balance risk versus reward by adjusting the percentage of amount invested in an asset of a portfolio according to the risk tolerance of the investor, his/her goals and the investment time frame.

Description: Financial assets vary in returns from each other depending on market conditions and user requirements. Almost all asset classes are not perfectly correlated with each other, so diversifying across multiple sectors tends to bring down the overall risk of a portfolio.

Strategic Asset Allocation

This involves allocating fixed weights to various asset classes over the entire investment horizon. The return of the portfolio is then simply the weighted average return of various asset classes. For example, if you invest 60 per cent of your investments in stocks which have 15 per cent returns and 40 per cent in bonds which offer 5 per cent returns, then the mean return of the portfolio is 11 per cent.

Tactical Asset Allocation

This strategy allows short term deviations from the ideal asset allocation to capitalize on market fluctuations or attractive investment opportunities that exist for a small period of time. The investor tends to remain moderately active and once the short term profits have been achieved the portfolio is rebalanced to the original mix.

Dynamic Asset Allocation

This strategy is meant for active investors who monitor their portfolio on a regular basis. The investor tends to modify the allocation percentage of various assets depending upon the how the markets and the economy is fluctuating. User may shift the gains from a volatile asset to less risky assets when markets are correcting or may shift to riskier assets when the markets are booming.

Definition: An auction market is the market where interested buyers and sellers enter ambitious bids and offers, respectively, at the same time. The price at which the security trade reflects the highest price the buyer is interested to pay and the lowest price at which the seller is interested to sell.
The trade is executed at the price where the bid and the offer price match. It is different from an over-the-counter (OTC) market where the trades are negotiated. Auction is also used in initial public offerings (IPOs). The type of auction used in IPOs is called Dutch auction. Auction is used in different stock exchanges around the world.
Description: In simple terms, an auction market is the place where the highest price is defined by buyers and the lowest price is defined by sellers to place an order for a particular entity or service. The transaction is executed only if both the buyer and seller agree on the defined price or amount.
A standard example of an auction market is the New York Stock Exchange (NYSE). Auction markets vary from one counter to another and trades are also negotiable at that place. The New York Stock Exchange (NYSE) is one of the world’s leading auction markets.
For example, suppose 10 buyers want to buy a share of a company called ABC and make bids at Rs 10, Rs 20, Rs 30, Rs 40 till Rs 100.
On the other hand, there are 10 sellers who seek to sell the same shares at Rs 15, Rs 25, Rs 60, and Rs 120. Here, the transaction between the buyer and seller that made bids/offers for ABC company shares will be done at Rs 60. All other orders will not be made immediately and the minimum price of shares will then be Rs 60.